Swanson and associates presently leases a copy machine

Accounting Multiple Choice Questions

1) The contribution-margin ratio is:

the difference between the selling price and the variable cost per unit.

fixed cost per unit divided by variable cost per unit.

variable cost per unit divided by the selling price.

unit contribution margin divided by the selling price.

unit contribution margin divided by fixed cost per unit.


2) A company observed a decrease in the cost per unit. All other things being equal, which of the following is probably true?

The company is studying a variable cost, and total volume has increased.

The company is studying a variable cost, and total volume has decreased.

The company is studying a fixed cost, and total volume has increased.

The company is studying a fixed cost, and total volume has decreased.

The company is studying a fixed cost, and total volume has remained constant.


3) A company has fixed costs of $900 and a per-unit contribution margin of $3. Which of the following statement is (are) true?

Total contribution margin equals the sum of variable cost plus fixed cost.

The situation described is not possible and there must be an error.

Once the break-even point is reached, the company will increase income at the rate of $3 per unit.

The firm will definitely lose money in this situation.


4) Ribco Co. makes and sells only one product. The unit contribution margin is $6 and the break-even point in unit sales is 24,000. The company's fixed costs are:

$4,000.

$14,400.

$40,000.

$144,000.

an amount other than those above.


5) Which of the following methods of cost estimation relies on only two data points?

Least-squares regression.

The high-low method.

The visual-fit method.

Account analysis.

Multiple regression.


6) A manager who wants to determine the percentage impact on income of a given percentage change in sales would multiply the percentage increase/decrease in sales revenue by the:

contribution margin.

gross margin.

operating leverage factor.

safety margin.

contribution-margin ratio.


7) Brooklyn sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Brooklyn's unit sales are 200 units less than anticipated, its breakeven point will:

increase by $12 per unit sold.

decrease by $12 per unit sold.

increase by $8 per unit sold.

decrease by $8 per unit sold.

not change.

8) Swanson and Associates presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies. The company uses the high-low method to analyze costs.
Swanson's variable cost per copy is:

$0.040.


$0.051.


$0.053.


$0.056.

9) At a volume of 20,000 units, Dries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's contribution margin per unit is:

$22.

$28.

$35.

$37.

an amount other than those above.

10) A forecast of a cost at a particular level of activity is termed:

cost estimation.

cost prediction.

cost behavior.

cost analysis.

cost approximation.

11) At a volume of 20,000 units, Dries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's break-even point in units is:

7,027 (rounded).

8,667 (rounded).

9,286 (rounded).

7,429 (rounded).

an amount other than those above.


12) The difference between budgeted sales revenue and break-even sales revenue is the:

contribution margin.

contribution-margin ratio.

safety margin.

target net profit.

operating leverage.


13) DuChien Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to $50,000; variable costs were $100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units?

$150,000.

$151,000.

$152,000.

$153,000.

Some other amount not listed above.

14) Which of the following costs changes in direct proportion to a change in the activity level?

variable cost.

fixed cost.

semivariable cost.

step-variable cost.

step-fixed cost.

15) Northlake, Inc., uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $9.75. On the basis of this information, the company's fixed maintenance costs were:

$24,000.

$90,000.

$210,00.

$234,000.

an amount other than those listed above.

16) Yellow Dot, Inc. sells a single product for $10. Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level would Yellow Dot have to achieve to earn a target profit of $240,000?

$400,000.

$500,000.

$600,000.

$750,000.

$900,000.

17) Booster, Inc. recently conducted a least-squares regression analysis to predict selling expenses. The company has constructed the following regression equation: Y = 329,000 + 7.80X. Which of the following statements is false if the primary cost driver is number of units sold?

The company anticipates $329,000 of fixed selling expenses.

"Y" represents total selling expenses.

The company expects both variable and fixed selling expenses.

For each unit sold, total selling expenses will increase by $7.80.

"X" represents the number of hours worked during the period.

18) Within the relevant range, a curvilinear cost function can sometimes be graphed as a:

sloping straight line.

jagged line.

vertical straight line.

curved line.

horizontal straight line.

19) Swanson and Associates presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies. The company uses the high-low method to analyze costs.
How much would Swanson's pay if it made 5,500 copies?

$382.50.


$322.


$300.


$292.50

20) Swanson and Associates presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Swanson made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies. The company uses the high-low method to analyze costs.
Swanson's monthly fixed fee is: